In March 2012, the nation’s public broadcasters gathered in Austin, TX, for the annual meeting of the Integrated Media Association, a public-service broadcaster group dedicated to smoothing the transition to the digital age. At the front of the room, Jake Shapiro, the chief executive of Public Radio Exchange (PRX) in Boston, and John Bracken, director of media innovation at the Knight Foundation, announced that they had formed an accelerator for start-up companies. The project would marry Silicon Valley innovation with the mission and values of public-service broadcasting.
“We can overcome public media’s innovation and talent gap by becoming a magnet for these efforts,” Shapiro reportedly told the crowd.
John Boland, president of California’s KQED, nearly jumped out of his seat when he heard Shapiro. “This was exactly what we were looking to do,” he says. “We weren’t sure what part, but we just knew if this was happening in our own backyard we wanted to be involved.”
Boland had just spent the previous months working with KQED’s management, staff, and board of directors to craft a strategic plan for California’s largest public media organization. Their conclusion was dramatic: They needed to rebuild their ship while it was still floating in the water.
KQED’s business model—deliver high-quality content for free and then ask those who can afford to contribute—was still sound. Voluntary contributions from individuals, which account for nearly 50 percent of revenues, have been stable over the past five years. Total revenues in 2012 were at an all-time high. But the station’s TV audience is aging, and its radio listeners are only a little younger. The youngest and fastest-growing portion of KQED’s audience is online, and the station had to figure out how to tailor its product to their needs. “People want more on digital platforms. They still want their radio and television, but they want more on their digital platforms,” Boland says. “Now is the time for big changes.”
Boland nabbed Shapiro and Bracken when the conference session was over. He wanted into the incubator. By December 2012, Matter Ventures—a partnership between KQED, Knight, PRX, and Matter managing partner Corey Ford—was born.
Matter is one of a handful of so-called accelerators, venture-capital operations organized by legacy media outlets to help carefully selected entrepreneurs launch their start-ups. It’s symbiotic: The young entrepreneurs want to turn their ideas into viable businesses, and in return the legacy outlets get a stake in the start-ups—which, if the start-ups succeed, will provide much-needed revenue. But more important, the legacy outlets hope that the products that emerge will help them adapt and thrive in the digital age. There is no guarantee of success. Although figures vary widely, one Harvard Business School study estimates that 75 percent of start-ups will fail. “We are not counting on any financial return for this,” Boland says. “However, if any of them should become the next Facebook, we would have a very large endowment.”
Accelerator camps—which focus not just on journalism but on commerce, technology, and other areas—are so in vogue these days that tech sites advise young entrepreneurs on how to choose the best ones. There are four main media accelerators, three of which started this year. In Germany, Axel Springer AG signed a joint venture with Plug and Play Tech Center to help digital-media entrepreneurs in Europe. Matter focuses solely on public media and journalism. Turner Broadcasting/Warner Bros Media Camp and BBC Worldwide Labs, founded in 2012, target entrepreneurs who can specifically help their companies. That contrasts with Matter and Springer Plug and Play, which offer their entrepreneurs independence.
Not long after Boland glimpsed the future in Texas, top executives of Axel Springer were touring Silicon Valley, in search of their own inspiration. The executives from Germany’s second-largest media conglomerate were tired of scrambling to keep up with the aggregators, search engines, and blogs that continually disrupted their once-successful business model.
While Springer’s digital segment already contributes 39 percent of company revenues, and that number is rising, its legacy segment is losing ground. By the company’s own calculations, revenues collected by all German publishers combined from online banner ads are a mere tenth of what Google Germany collects in search ads. “We didn’t have a product in place,” says Christoph Keese, an executive vice president at Springer. “Why? Because we weren’t looking. This should never happen again.”
They met with a who’s who of Silicon Valley: designers, hackers, heads of Palo Alto’s biggest companies, professors, and financiers like Plug and Play Tech Center. These middle-aged Germans even listened to a teenage whiz kid who was already getting his master’s degree at Stanford—then they hired him as an intern.